 | If you've been thinking about installing solar on your home, you may want to do so prior to the end of 2019, as the tax credits are changing..... |
Solar Tax Credit, Explained
The Solar Credit provides a 30% benefit on taxes for the purchase & installation of a solar system. This includes the total cost, meaning system cost, installation, associated electrical work, required roofing modifications, etc.
Remember, credits are a dollar-for-dollar reduction in taxes.
The credit only applies to those who own the system (leases cannot claim the credit) and to those who have a tax liability to be offset by the credit.
For example, if you install a $30,000 solar system, you’d be looking at a $9,000 tax credit from the IRS. However, if your total tax liability is only $7,500 for the year, you would have to rollover the $1,500 difference ($9,000 - $7,500) to the following year.
The Credit Is Decreasing
For years, the credit has been 30% of the total system cost.
However, in 2016, the IRS introduced a step-down to the credit, meaning the percentage will begin to decrease starting with the 2020 tax year. See below for the future credit schedule.
2019: 30%
2020: 26%
2021: 22%
2022: 10% (commercial solar only)
The Solar Credit provides a 30% benefit on taxes for the purchase & installation of a solar system. This includes the total cost, meaning system cost, installation, associated electrical work, required roofing modifications, etc.
Remember, credits are a dollar-for-dollar reduction in taxes.
The credit only applies to those who own the system (leases cannot claim the credit) and to those who have a tax liability to be offset by the credit.
For example, if you install a $30,000 solar system, you’d be looking at a $9,000 tax credit from the IRS. However, if your total tax liability is only $7,500 for the year, you would have to rollover the $1,500 difference ($9,000 - $7,500) to the following year.
The Credit Is Decreasing
For years, the credit has been 30% of the total system cost.
However, in 2016, the IRS introduced a step-down to the credit, meaning the percentage will begin to decrease starting with the 2020 tax year. See below for the future credit schedule.
2019: 30%
2020: 26%
2021: 22%
2022: 10% (commercial solar only)